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Housing Choices and Labor Income Risk

Author

Listed:
  • Jansson, Thomas

    (Monetary Policy Department, Central Bank of Sweden)

Abstract

I show that individuals whose unemployment risk tends to increase more when local home prices fall optimally invest less in owner-occupied housing. Using a unique, Swedish register based database, I find that a one standard deviation increase in the covariance between individually estimated unemployment risks and local home prices implies an average increase in the value of households investments in owner-occupied housing of USD 13,300. Further, I find, in line with the predictions of my theoretical model, that same-industry couples rent more often, but, conditional on ownership, invest USD 9,200 more on average in single-family homes than different-industry couples.

Suggested Citation

  • Jansson, Thomas, 2013. "Housing Choices and Labor Income Risk," Working Paper Series 272, Sveriges Riksbank (Central Bank of Sweden).
    • Handle: RePEc:hhs:rbnkwp:0272
    as

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    File URL: http://www.riksbank.se/Documents/Rapporter/Working_papers/2013/rap_wp272_130919.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    homeownership; housing demand; unemployment; house price risk;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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